Summary
Morgan Stanley reported a decrease in net revenues and net income for the first quarter of 2020 compared to the prior year quarter, primarily due to the significant economic impacts of the COVID-19 pandemic in March. Net revenues were $9.5 billion, down from $10.3 billion year-over-year, while net income applicable to Morgan Stanley was $1.7 billion, or $1.01 per diluted share, down from $2.4 billion, or $1.39 per diluted share. The firm experienced mark-to-market losses and increased provisions for credit losses across its business segments, particularly in Institutional Securities, which saw a 40% decline in income before taxes. While trading revenues in Institutional Securities benefited from increased volatility, this was offset by losses on loans and lending commitments. Wealth Management revenues also declined, impacted by investment losses related to deferred compensation plans. Despite these challenges, Morgan Stanley maintained strong capital and liquidity positions, with total liquidity resources increasing significantly. Key developments during the quarter included the planned acquisition of E*TRADE, announced in February 2020, which is expected to close in the fourth quarter of 2020. The firm also voluntarily suspended its share repurchase program in March 2020, in line with industry actions, to preserve capital. Management noted that the ongoing pandemic and economic crisis make it uncertain whether the previously stated ROTCE Target will be met within the originally stated timeframe.
Financial Highlights
35 data points| Interest Expense | $2.15B |
| Net Income | $1.70B |
| EPS (Basic) | $1.02 |
| EPS (Diluted) | $1.01 |
| Shares Outstanding (Basic) | 1.55B |
| Shares Outstanding (Diluted) | 1.57B |
Key Highlights
- 1Net revenues for Q1 2020 were $9.5 billion, a decrease of 8% year-over-year, impacted by COVID-19.
- 2Net income applicable to Morgan Stanley was $1.7 billion ($1.01/diluted share), down from $2.4 billion ($1.39/diluted share) in Q1 2019.
- 3Institutional Securities segment experienced a 40% decrease in income before taxes, driven by losses on loans and increased credit loss provisions, partially offset by strong trading revenues.
- 4Wealth Management segment saw an 8% decrease in net revenues, impacted by investment losses related to deferred compensation plans.
- 5The firm maintained strong liquidity resources, which increased to $255.1 billion at March 31, 2020, up from $215.9 billion at December 31, 2019.
- 6Morgan Stanley announced plans to acquire E*TRADE Financial Corporation in an all-stock transaction, expected to close in Q4 2020.
- 7The firm voluntarily suspended its share repurchase program in March 2020 due to the COVID-19 pandemic.